Thursday, February 26, 2009

The same man said these words:

2007:"My view is that the evidence is overwhelming that most people are too risk averse. And that therefore they should be taking a lot more risk than they feel like is right. "

2009:" The problem with credit is that it is far too expensive to makeit economic to use it to grow. With investment grade debthaving yields greater than the growth rate of nominal GDP,the cost of new debt in the system exceeds the ability to earnenough to pay for it. Hence, the deleveraging going on. Thegovernment on the other hand, can borrow at half the growthrate of nominal GDP, and hence, it is the government thatwill, and should, borrow aggressively to invest in the country’sfuture.All of this was explained a generation ago by Keynes whenwe last had a crisis like this, and anyone seeking tounderstand it should either go to the source, or to the secondvolume of Robert Skidelsky’s monumental three-volumebiography.I remain optimistic that the new administration, which isstaffed with first rate financial talent, coupled with the Fed,"

The point:

The 2009 post is identical to the psychobabbles you have been hearing recently from everyone in the government and "analysts" on TVs.

Having not lived 1929 nor trust anyone including unknown financial bloggers, you began to have doubt, hope, uncertainty: could it really be the magic bullet? Print $1 and get $1.64 back?

There is only probabilities regarding the truth, the best a statistician can do is to look for OBSERVEABLE events that correlates very well with the answer you are seeking. Thus the photo and quote from 2007. :)